What Is One Difference Between Stocks and Bonds

question 31

Multiple Choice

What is one difference between stocks and bonds?

• A)Bonds earn a higher rate of return than stocks.
• B)Stocks earn a higher rate of return than bonds.
• C)Bonds are purchased at a bank,while stocks are purchased through the federal government.
• D)Stocks represent partial ownership in a firm,while bonds do not.

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Definitions:

Normal Profits

The level of profit that business owners consider satisfactory or "normal", essentially covering both explicit and implicit costs, including a normal rate of return on investment.

Accounting Profits

The total revenue of a business minus the explicit costs; it's the profit figure calculated according to generally accepted accounting principles.

Total Revenues

The overall income generated by a firm or economy from its business activities, including sales of goods and services, before any expenses are deducted.

Marginal Returns

The additional output that is produced by using one more unit of a variable resource, keeping all other inputs constant.